Question 1

The costs arising from activities that benefit two or more units are generally referred to as controllable costs.

Accepted Answer

A) True 
 B)False

Question 2

The following information was taken from the business unit profit and loss statement of Resell Real Estate Agents for 2014:  
In addition, the company incurred common fixed costs of $18 000. Which amount should be used to evaluate the Sydney Division as an investment of the company?

Accepted Answer

A)  $25 000 
B)  $10 000 
C)  $4000 
D)  ($8000) 
A)  $25 000 
B)  $10 000 
C)  $4000 
D)  ($8000)

Question 3

Performance reports
The performance reports generated by a responsibility accounting system form a hierarchy of 'performance reports'. Explain what is meant by this term.

Accepted Answer

The performance reports are tied to the

Question 4

Which of the following statements about transfer pricing is/are true?
i. Income taxes and import duties are an important consideration when setting a transfer price for international companies.
ii. Transfer prices cannot be used by organisations in a service industry.
iii. Transfer prices are totally cost-based and not market-based.

Accepted Answer

A)  i 
B)  ii 
C)  i and ii 
D)  All of the given answers 
A)  i 
B)  ii 
C)  i and ii 
D)  All of the given answers

Question 5

Which of the following is NOT a performance measurement characteristic?

Accepted Answer

A)  Simplistic 
B)  Timely 
C)  Unlimited performance measures 
D)  Benchmarking 
A)  Simplistic 
B)  Timely 
C)  Unlimited performance measures 
D)  Benchmarking

Question 6

Management's ability to close the accounting books at any time is termed:

Accepted Answer

A)  real-time reporting. 
B)  virtual close. 
C)  flash reporting. 
D)  shut-down reporting. 
A)  real-time reporting. 
B)  virtual close. 
C)  flash reporting. 
D)  shut-down reporting.

Question 7

What is the general rule for setting a transfer price?

Accepted Answer

A)  Additional costs of the supplying division + opportunity cost to the buying division 
B)  Additional costs of the supplying division + opportunity cost to the supplying division 
C)  Additional costs of the buying division + opportunity cost to the supplying division 
D)  Always set at full-cost-plus price 
A)  Additional costs of the supplying division + opportunity cost to the buying division 
B)  Additional costs of the supplying division + opportunity cost to the supplying division 
C)  Additional costs of the buying division + opportunity cost to the supplying division 
D)  Always set at full-cost-plus price

Question 8

An opportunity cost can best be described as the:

Accepted Answer

A)  pricing of goods as per market trends. 
B)  direct expenses incurred in producing goods. 
C)  total difference in cost of production between two divisions. 
D)  the benefit that is foregone for one alternative in order to pursue another alternative. 
A)  pricing of goods as per market trends. 
B)  direct expenses incurred in producing goods. 
C)  total difference in cost of production between two divisions. 
D)  the benefit that is foregone for one alternative in order to pursue another alternative.

Question 9

Barrister Company has two divisions: A and Z. The A Division produces a single product that can be sold to outside customers or to the Z Division. Sales forecasts, production statistics and costs for both divisions for 2014 are shown below:
A Division:  
Z Division:  
* When A Division sells to Z Division, no variable selling costs are incurred by A Division.
Calculate the minimum per unit transfer price that A Division should charge Z Division in 2014, using the general transfer-pricing formula.

Accepted Answer

A)  $6.00 
B)  $8.50 
C)  $7.26 
D)  None of the given answers 
A)  $6.00 
B)  $8.50 
C)  $7.26 
D)  None of the given answers

Question 10

Transfer prices should not be based on absorption costs as this could result in suboptimal decisions by the:

Accepted Answer

A)  personnel division. 
B)  competitive market. 
C)  buying division. 
D)  selling division. 
A)  personnel division. 
B)  competitive market. 
C)  buying division. 
D)  selling division.

Question 11

Which of the following statements best completes this sentence? 'The biggest challenge(s) facing all decentralised firms is .....'

Accepted Answer

A)  to reap the advantages of autonomy. 
B)  to attempt to ensure goal congruence. 
C)  to choose the most appropriate transfer price. 
D)  to reap the advantages of autonomy AND to attempt to ensure goal congruence. 
A)  to reap the advantages of autonomy. 
B)  to attempt to ensure goal congruence. 
C)  to choose the most appropriate transfer price. 
D)  to reap the advantages of autonomy AND to attempt to ensure goal congruence.

Question 12

Which of the following are characteristics of flash reports?
i. Provided daily
ii. Include both financial and non-financial information
iii. Comprehensive and cover the full range of performance criteria

Accepted Answer

A)  i and ii 
B)  i and iii 
C)  ii and iii 
D)  All of the given answers 
A)  i and ii 
B)  i and iii 
C)  ii and iii 
D)  All of the given answers

Question 13

Which of the following is a problem with the use of a negotiated transfer price?

Accepted Answer

A)  The negotiations can be extremely time-consuming. 
B)  The final transfer price may be primarily due to an individual's superior negotiation skills. 
C)  It can lead to suboptimal decisions for the firm. 
D)  All of the given answers 
A)  The negotiations can be extremely time-consuming. 
B)  The final transfer price may be primarily due to an individual's superior negotiation skills. 
C)  It can lead to suboptimal decisions for the firm. 
D)  All of the given answers

Question 14

What is a negative consequence of decentralisation?

Accepted Answer

A)  Narrow focus 
B)  Services may be duplicated 
C)  Suboptimal decisions may be made 
D)  All of the given answers 
A)  Narrow focus 
B)  Services may be duplicated 
C)  Suboptimal decisions may be made 
D)  All of the given answers

Question 15

Identify and briefly describe the four ways performance measures can be used within a planning and control system.

Accepted Answer

Performance measures can be used to <i>c

Question 16

Which of the following managers is held accountable for only the revenue attributed to a unit?

Accepted Answer

A)  Cost centre manager 
B)  Revenue centre manager 
C)  Sales manager 
D)  Investment centre manager 
A)  Cost centre manager 
B)  Revenue centre manager 
C)  Sales manager 
D)  Investment centre manager

Question 17

One advantage of business unit reports is that they make a distinction between business units and:

Accepted Answer

A)  business unit managers. 
B)  budgets. 
C)  allocated costs. 
D)  cost objects. 
A)  business unit managers. 
B)  budgets. 
C)  allocated costs. 
D)  cost objects.

Question 18

Daily online reporting of critical information is known as:

Accepted Answer

A)  real-time reporting. 
B)  virtual close. 
C)  flash reporting. 
D)  shut-down reporting. 
A)  real-time reporting. 
B)  virtual close. 
C)  flash reporting. 
D)  shut-down reporting.

Question 19

Nova Company has two divisions: OPA Division and LPA Division. The OPA Division manufactures a single product, presently operates at 95 per cent of full capacity (100 000 units) and can sell all 95 000 units produced to outside customers. This product is also a component used in a product made by the LPA Division. OPA's full cost of production is $22.50 per unit, including $4.50 of applied fixed overhead costs. The applied fixed overhead is calculated based on production of 95 000 units. OPA's management believes that production can be raised to 100 000 units without affecting cost behaviour. OPA's selling price per unit is $30 with a 10 per cent sales commission on outside sales. LPA is presently negotiating the purchase of units from OPA. LPA can purchase a comparable component outside for $29.
Using the general transfer-pricing formula, calculate a transfer price for 5000 units that would be in the best interests of the company as a whole.

Accepted Answer

A)  $18.00 
B)  $22.50 
C)  $27.80 
D)  $29.00 
A)  $18.00 
B)  $22.50 
C)  $27.80 
D)  $29.00

Question 20

In a divisional corporate organisation, an ideal inter-divisional transfer price should:

Accepted Answer

A)  maximise the profits of the selling division. 
B)  maximise the profits of the corporation. 
C)  ensure goal congruence, divisional autonomy and motivation. 
D)  All of the given answers 
A)  maximise the profits of the selling division. 
B)  maximise the profits of the corporation. 
C)  ensure goal congruence, divisional autonomy and motivation. 
D)  All of the given answers

The costs arising from activities that benefit two or more units are generally referred to as controllable costs.

The following information was taken from the business unit profit and loss statement of Resell Real Estate Agents for 2014: In addition, the company incurred common fixed costs of $18 000. Which amount should be used to evaluate the Sydney Division as an investment of the company?

Performance reports The performance reports generated by a responsibility accounting system form a hierarchy of 'performance reports'. Explain what is meant by this term.

Which of the following is NOT a performance measurement characteristic?

Management's ability to close the accounting books at any time is termed:

What is the general rule for setting a transfer price?

An opportunity cost can best be described as the:

Transfer prices should not be based on absorption costs as this could result in suboptimal decisions by the:

Which of the following statements best completes this sentence? 'The biggest challenge(s) facing all decentralised firms is .....'

Which of the following are characteristics of flash reports? i. Provided daily ii. Include both financial and non-financial information iii. Comprehensive and cover the full range of performance criteria

Which of the following is a problem with the use of a negotiated transfer price?

What is a negative consequence of decentralisation?

Identify and briefly describe the four ways performance measures can be used within a planning and control system.

Which of the following managers is held accountable for only the revenue attributed to a unit?

One advantage of business unit reports is that they make a distinction between business units and:

Daily online reporting of critical information is known as:

In a divisional corporate organisation, an ideal inter-divisional transfer price should:

Management Accounting: Information for Creating Value and Managing Resources

Management Accounting: Cost Terms and Concepts

Cost Behaviour, Cost Drivers and Cost Estimation

Product Costing Systems

Process Costing and Operation Costing

Service Costing

A Closer Look at Overhead Costs

Activity-Based Costing

Budgeting Systems

Standard Costs for Control: Direct Material and Direct Labour

Standard Costs for Control: Flexible Budgets and Manufacturing Overhead

Financial Performance Measures and Incentive Schemes

Strategic Performance Measurement Systems

Managing Suppliers and Customers

Managing Costs and Quality

Sustainability and Management Accounting

Cost Volume Profit Analysis

Information for Decisions: Relevant Costs and Benefits

Pricing and Product Mix Decisions

Information for Capital Expenditure Decisions

Filters

Exam 12: Managing and Reporting Performance

The costs arising from activities that benefit two or more units are generally referred to as controllable costs.

The following information was taken from the business unit profit and loss statement of Resell Real Estate Agents for 2014: In addition, the company incurred common fixed costs of $18 000. Which amount should be used to evaluate the Sydney Division as an investment of the company?

Performance reports The performance reports generated by a responsibility accounting system form a hierarchy of 'performance reports'. Explain what is meant by this term.

Which of the following is NOT a performance measurement characteristic?

Management's ability to close the accounting books at any time is termed:

What is the general rule for setting a transfer price?

An opportunity cost can best be described as the:

Transfer prices should not be based on absorption costs as this could result in suboptimal decisions by the:

Which of the following statements best completes this sentence? 'The biggest challenge(s) facing all decentralised firms is .....'

Which of the following are characteristics of flash reports? i. Provided daily ii. Include both financial and non-financial information iii. Comprehensive and cover the full range of performance criteria

Which of the following is a problem with the use of a negotiated transfer price?

What is a negative consequence of decentralisation?

Identify and briefly describe the four ways performance measures can be used within a planning and control system.

Which of the following managers is held accountable for only the revenue attributed to a unit?

One advantage of business unit reports is that they make a distinction between business units and:

Daily online reporting of critical information is known as:

In a divisional corporate organisation, an ideal inter-divisional transfer price should:

Management Accounting: Information for Creating Value and Managing Resources

Management Accounting: Cost Terms and Concepts

Cost Behaviour, Cost Drivers and Cost Estimation

Product Costing Systems

Process Costing and Operation Costing

Service Costing

A Closer Look at Overhead Costs

Activity-Based Costing

Budgeting Systems

Standard Costs for Control: Direct Material and Direct Labour

Standard Costs for Control: Flexible Budgets and Manufacturing Overhead

Financial Performance Measures and Incentive Schemes

Strategic Performance Measurement Systems

Managing Suppliers and Customers

Managing Costs and Quality

Sustainability and Management Accounting

Cost Volume Profit Analysis

Information for Decisions: Relevant Costs and Benefits

Pricing and Product Mix Decisions

Information for Capital Expenditure Decisions

Filters